A recent report from Standard & Poor’s (S&P) Ratings Services said that a financial crisis similar to the one that affected several Asian countries’ currency values and stock markets in 1997 is unlikely and that the banking system is “in a better position.”
S&P’s Asia 1997 Retrospective report says that “possible stress” is unlikely as the key drivers of the earlier crisis such as high “foreign currency debt exposure,” lack of “hedging policies against foreign exchange risk,” and weak sovereigns without
”external positions” and “stronger reserves” do not exist. However, “the overall increase in the debt of sovereigns and, to a lesser extent, corporates remains a concern.”
The analysis looked at 9 system risk factors of 10 financial systems of China , Hong Kong , Indonesia , India , Korea , Malaysia , the Philippines , Singapore , Taiwan , and Thailand . The parameters considered included banking system structures, government debt, and international reserves. Despite the vote of confidence, S&P says that these economies are still to regain their full pre-1977 crisis strength.
